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Nomad Foods Ltd (NASDAQ:NOMD) reported its second-quarter 2025 earnings, surpassing EPS expectations but falling short on revenue forecasts. The company posted an EPS of $0.40, exceeding the forecasted $0.38, marking a 5.26% surprise. However, revenue reached $747 million, missing the anticipated $770.67 million. Despite the earnings beat, Nomad Foods’ stock declined by 5.57% in pre-market trading, reflecting investor concerns over revenue shortfall and market conditions. According to InvestingPro data, the company maintains strong fundamentals with a "GOOD" overall Financial Health score and robust profitability metrics.
Key Takeaways
- Nomad Foods exceeded EPS expectations with a 5.26% surprise.
- Revenue fell short of forecasts by 3.07%, impacting investor confidence.
- Pre-market stock price fell by 5.57% following the earnings report.
- Inflationary pressures and market volume declines affected gross margins.
- Innovation initiatives are set to double in 2024, focusing on new product lines.
Company Performance
Nomad Foods experienced a mixed performance in Q2 2025. The company managed to beat EPS expectations, showcasing effective cost management strategies. However, a revenue miss and declining market volumes due to inflationary pressures and extreme weather conditions in Western Europe posed significant challenges. Despite these hurdles, Nomad Foods maintained its market share and continued to focus on product innovation and expansion.
Financial Highlights
- Revenue: $747 million, down from the forecast of $770.67 million.
- Earnings per share: $0.40, beating the forecast of $0.38.
- Gross margin decreased due to inflation and market volume declines.
Earnings vs. Forecast
Nomad Foods’ EPS of $0.40 surpassed the forecasted $0.38, marking a 5.26% positive surprise. However, revenue came in at $747 million, missing the expected $770.67 million by 3.07%. This revenue shortfall, despite the EPS beat, highlights ongoing challenges in market conditions and inflation.
Market Reaction
Following the earnings release, Nomad Foods’ stock fell by 5.57% in pre-market trading, closing at $15.78 from a previous $16.71. The decline reflects investor concerns over the revenue miss and broader market volatility. The stock is currently trading near its 52-week low of $14.72, indicating cautious investor sentiment. InvestingPro analysis suggests the stock is currently undervalued, with analyst targets ranging from $18.07 to $27.76. The company boasts a strong free cash flow yield of 19% and trades at an attractive P/E ratio of 9.5x.
Outlook & Guidance
Nomad Foods projects full-year organic growth between 0% and -2%, with H2 growth expected to range from +2.5% to -1.5%. The company remains cautious about Q3 growth due to ongoing inflationary pressures. Strategic initiatives include pricing strategies to offset inflation and a focus on product innovation, with plans to double innovation efforts in 2024. For deeper insights into Nomad Foods’ financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 10+ additional ProTips and detailed valuation metrics in the Pro Research Report, part of the platform’s coverage of 1,400+ US equities.
Executive Commentary
CEO Stephane Deschmaker expressed disappointment in the first half performance but remained optimistic about the future, stating, "While I’m disappointed by our first half performance, I remain confident in the future that lies ahead of us." CFO Ruben Baldeau highlighted the company’s pricing strategy to manage inflation: "We will take pricing to recover [inflation], but we’re also conscious that we need to be cost competitive."
Risks and Challenges
- Inflationary pressures increasing costs and impacting margins.
- Declining market volumes in key regions.
- Extreme weather conditions affecting crop yields and supply chains.
- Volatile consumer purchasing patterns.
- Competitive pressure from private labels and market saturation.
Q&A
During the earnings call, analysts inquired about the impact of weather on sales, inflation management strategies, and capital allocation priorities. Executives addressed these concerns by outlining plans for innovation and cost management, emphasizing a strategic focus on product development and market competitiveness.
Full transcript - Nomad Foods Ltd (NOMD) Q2 2025:
Conference Operator: Greetings, and welcome to the NOMAN Foods Second Quarter twenty twenty five Question and Answer Session. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Jason English, Head of Investor Relations. Thank you.
You may now begin.
Jason English, Head of Investor Relations, Nomad Foods: Good morning, everyone, and thank you for joining us today. I hope everyone has had the chance to read our press release and listen to our prerecorded management remarks, both of which are available on our website. In addition, we have posted a transcript of the prerecorded remarks and the accompanying presentation. At the conclusion of today’s live Q and A session, we’ll also post an audio replay of this call. Please note that during today’s Q and A session, we may make forward looking statements that are based on our view of the company’s prospects, expectations and intentions at this time.
Actual results may differ due to risks and uncertainties, which are discussed in our press release, our filings with the SEC and in our investor presentation, which includes cautionary language. We will also discuss non IFRS financial measures during the call today. These non IFRS financial measures should not be considered a replacement for and should be read together with IFRS results. Users can find the IFRS to non IFRS reconciliations within our earnings release and the appendices at the end of the slide presentation available on our website. Please note that certain financial information within this presentation represents adjusted figures.
All adjusted figures have been adjusted primarily for, when applicable, share based payment expenses and related employer payroll taxes, exceptional items, and foreign currency translation charges or gains. Unless otherwise noted, comments from here will refer to those adjusted numbers. Joining me today are Nomad Foods CEO, Stephane Deschmaker and CFO, Ruben Baldeau. Now let’s get started with our first question. Operator?
Conference Operator: We will now begin the question and answer session. To a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. The first question comes from Andrew Lazar with Barclays. Please go ahead.
Andrew Lazar, Analyst, Barclays: Great, thanks so much. And thanks again to you guys for putting out the published prepared remarks. That’s actually very helpful to us in sort of getting through the results pretty quickly. Maybe, Stephane, just as a starting point, I guess what gives you the confidence and sort of the visibility that you finally called the full year guidance low enough given the pattern more recently of missing and guiding lower over the past year?
Stephane Deschmaker, CEO, Nomad Foods: Thanks, Andrew. It’s a great question, and obviously it’s a very important question for us. Let me stand back for just a second. I’ve been with the company for ten years since we started, and quite frankly to your point, I don’t think we’ve been accustomed to this. So it’s really something that we need to take into consideration, the guidance.
The second point is, at the same time, over the last ten years, with all the disruptions we’ve been through, I think we’ve been very good at learning from all these events. So let me first start with what I think is self inflicted, and I’m really taking this on me. I think we were too optimistic with our ERP implementation. That’s the first piece. And the second level, we also had an excess inventory in Q1 that quite frankly we did a poor job at anticipating it.
And quite frankly, I’m taking these two points with me. I think the lessons, though, is in terms of our ERP, we’re slowing down the program just to make sure that we’re taking the right level in terms of risk digestion of all the things we’re doing, which is absolutely fundamental. And I’m very pleased with what the team is doing at this stage. And in terms of excess inventory and all these things between sell in and sell out, quite frankly what I’ve seen is the team is doing a much, much, much better job at reading the visibility between both and let’s say the dynamics between both, especially during these volatile times. So that’s the first piece, which is really quite frankly, I would call self inflicted.
The second piece, especially in Q2, is the weather. For Well, your information, June in Western Europe was the hottest June record in the region. Some differences, obviously, let’s say Nordics If you take countries like France, like UK, like Belgium, well the numbers, especially between mid June to mid July, well you have numbers around minus 5%, minus six minus 7% for the market as such, where quite frankly we would have expected to be in the region of 1.5% to 2%. At the same time, we’ve been able to gain market share, especially in volume, which is good.
And despite the fact that all categories are especially fish and vegetables are undertrading, especially during the hot weather. But that’s not enough. So for us also the learning here is, okay, what can we do to make sure that we have a better summer assortment? Because basically, we don’t know whether it’s going to be a pattern for the future, but we need to be ready and to hedge our bets for the future for ’twenty six and beyond. And the teams are preparing things in terms of potatoes, in terms of, let’s say, natural fish and other things that we mentioned later.
So we have to make sure that basically we have either additional an opportunity for the future, which we always did, and obviously also how to hedge our bet versus what can happen in the future. We don’t know that piece. Now obviously with all these things and with all these volatility, yes, we have decided to take a wider range to take into account what potential risks, obviously, mostly around additional continuing heat wave. We haven’t seen it yet. Let’s face it, it’s interesting to see that July was very hot and we’ve seen the numbers immediately in terms of sellout and the second half was better from our standpoint, obviously, which means milder weather.
And we’ve seen immediately the correlation between the two. But this is why we’re taking this range. Obviously, there is no additional heat wave or something similar. Obviously we’re not going to touch the lower end, but that’s why we took a wider range. And I think it was not an easy decision.
We understand that. But at the same time, I definitely believe it’s the right decision.
Andrew Lazar, Analyst, Barclays: Okay. Thanks for that. And then maybe as a follow-up, the midpoint of organic growth guidance for the year would point to about 50 basis points of organic sales growth in the second half. If 3Q ultimately returns to some growth, as I think you’re you you hope it does, I know that would suggest, I guess, not a whole lot of improvement between 3Q and 4Q. Am I thinking about that the right way?
Or I would think maybe some of the sellout demand kind of build sequentially as you go through the year, but I’m just curious on your thoughts there. Thank you so much.
Ruben Baldeau, CFO, Nomad Foods: Yes, thank you, Andrew. Let me take that. So you’re right, let me also for the sake of the benefit for the whole group. So our range between zero and minus two assumes an H2 between a plus 2.5 and a minus 1.5 and indeed the midpoint is plus a half. You’re right that normally speaking, we should see growth in quarter three, but also to be clear on what Stefan just said, and I know the optics of the weather, but just some data points.
We’ve seen the market in quarter two in volume minus one. With Easter, we expect that to be plus one, one point five including the Easter. We don’t have all the sell out data yet for all markets, for the markets for which we have it, from mid June to mid July, we’ve seen market at minus 5.5. And we’ve seen that to Stefan’s point immediately reflected also in our sales, especially in North West Europe and big countries for us like UK. So that will have a track on quarter three.
So we’re not committing to growth in quarter three, depends on what Stefan just said, what are we seeing through the course of the quarter. Yes, and if there’s growth in quarter three, your mathematics are right and the midpoint assumes a bit more of a prudent assumption for quarter four. We’re also very conscious that we’ve not lowered the guidance two times, and we will avoid that happening again.
Andrew Lazar, Analyst, Barclays: Great, thanks so much.
Conference Operator: Our next question comes from Steve Powers with Deutsche Bank. Please go ahead.
Steve Powers, Analyst, Deutsche Bank: Great. Thank you very much. River, just to confirm on your 3Q commentary, you are fully understand the marketplace trends into the quarter and the dynamics, but you are lapping the ERP supply disruption over year ago. I think that was about a 2.5 negative to last year’s sales versus consumption? Just want to clarify that and make sure that that comparison still factors into your outlook.
Ruben Baldeau, CFO, Nomad Foods: Yeah, that’s correct. So we indeed have the ERP lag, which was last year in August and September, and that was 2.5. So also the numbers I just quoted, the 2.5 on the top end of the range and the minus 1.5 on the bottom end of the range, actually underlying are a bit worse. So you roughly talk about the top end around 1.5 and the bottom end around minus 2.5. So we’ll have the favorable comparator.
Although again, I have to repeat that what we’ve seen in July so far was a weak start, especially in The UK.
Steve Powers, Analyst, Deutsche Bank: Understood. Thank you. The broader question that we’re maybe you could talk a little bit more about the inflationary pressures you’ve seen build of lates and how those are likely to flow through ’25 and carry over into ’26. I know it’s very early, but just any kind of round numbers in terms of the magnitude of pricing that you would be considering in 2026 at this point, assuming the trends hold? Thank you.
Ruben Baldeau, CFO, Nomad Foods: Yes, thank you for asking this question. It’s an important question. So we started the year, and we said it also after quite long remarks, with an inflation assumption of around 2.5. We saw that going into 4% last quarter. And this quarter, we’re looking at a full year inflation of around 4.5%.
The additional increase we’ve seen from 4% to 4.5% is again, and I know the optics, but if you look at the weather, to Stefan’s point, has been the hottest summer in Western Europe since ever. The last one was 02/2003. It’s not only the temperature, it’s also the dry and the lack of rain. So The UK has seen 70% more sunshine, which means we’ve had the worst crop for example in peace. And that is the main reason why our inflation assumption has moved from 4% to 4.5%.
That’s also the main reason why you also see the gross margin drop in quarter two. Now going forward, and as we said last time, we will take some price where we are able to do that. For example, we will take some price in The UK. But if you take a step back, we have yearly negotiation cycles, which are mainly in quarter one. And we don’t see this as a reason to go up cycle.
So a lot of the recovery of the inflation we have seen coming through in this year And before we talked about chicken and now we see some of the crops will have to be taken into pricing for next year. Then your question is, what then about next year? Let’s be clear, our commitment now is and our focus now is making sure we deliver our commitments for 2025 and we set the right foundation and fundamental for 2026. Yes, we will take pricing to recover in 2026, but there are also some other puts and takes like for example, some bonus releases which we had this year, which will be a bit of a headwind next year.
Steve Powers, Analyst, Deutsche Bank: Okay, thank you very much. I’ll pass it on. Appreciate it.
Conference Operator: Our next question comes from Scott Marks with Jefferies. Please go ahead.
Scott Marks, Analyst, Jefferies: Hey, good morning. Thanks so much for taking our questions. First thing I wanted to ask about, you made some comments in the prepared remarks just about some of the SG and A savings and targeted overhead expense reductions. Maybe just wondering if you can kind of share any more details around some of those initiatives and how we should be thinking about those for the remainder of this year and then into next year?
Ruben Baldeau, CFO, Nomad Foods: Yes, thank you. So we have indeed seen and you’ve seen it also in the presentation, reduction in SG and A. Let’s also be clear that is driven predominantly by overheads, so not by A and P but by overheads. Yes, there is an impact of some bonus releases and I don’t want to go into detail of how much it was, but there’s a substantial saving also because of our focus on cost competitiveness and our focus on bringing indirects down after inflation, so compensating for inflation. And it also links to the previous question in terms of pricing and recovery.
Yes, we will be taking pricing, but we’re also conscious that we need to be cost competitive and don’t want to have over price index versus our competition. So some of the savings we have been driving like reductions in some of our support functions, some synergies we saw in some go to market organization will continue into ’26 as well.
Scott Marks, Analyst, Jefferies: Understood. Thanks for that. Next question I wanted to ask about is just around some of the innovations. There was some commentary around in 2024, I think you said about 10% of sales were from innovation and renovation. This year, that’s expected to nearly double.
Just wondering if you can share some thoughts around the innovation pipeline and how you see that shaping up for the rest of this year as well as next year. Thanks.
Stephane Deschmaker, CEO, Nomad Foods: Well, to your point, let me split it in between two pieces. This year, obviously, is going to be higher than that in combination of renovation and innovation. And both are equally important for us because renovation is absolutely fundamental in terms of making sure that we keep, we increase our security vis a vis your main competitors, I. E. Private label.
And that’s a key piece, and we have a very aggressive program in terms of making sure that obviously in terms that we would be superior or equal, but definitely superior in terms of our mission battles. That’s the first piece, and that program is well engaged. More to come obviously in the coming quarters. In terms of innovation, yes, the number, little by little, is increasing. We’re in the reach of now 6.5%, which is a big difference compared to where we were in ’twenty ’twenty three, which has gone down big time, especially during that time when price was the only thing that mattered for the retailers and the consumers.
And so in terms of innovation, well you’ve seen that there are series of things that we’re doing in terms of chicken, for example, in terms of fish. I mean, a lot of innovation in terms of snacking, which is a new area for us. So we were very much focused in terms of family meal time. I think there is a great opportunity for us in frozen food to go with snacking and we’re really starting this, especially in Italy, with fish strips and other things like that the same way. So a lot of things, quite frankly at this stage, protein balls is great as well.
It’s something that we’re going to launch in the next few weeks in The UK, in Netherlands, in Belgium. The countries are very excited by that. And then it’s successful and we think it’s going to be successful in more to come in the coming years because obviously also something we’re doing well and better and better is the move from one country to another through a lease and launch. If successful in one country, obviously we can go to other countries. So that program took a bit of time.
I think it was a bit of we were so focused on the must win battles that basically the rigor was not probably great in terms of innovation. It has changed, it is changing. We have the must win battles, we have the growth platforms in the new countries, and that is making a difference.
Scott Marks, Analyst, Jefferies: Understood. We’ll pass it on. Thanks so much.
Conference Operator: Our next question comes from John Baumkartner with Mizuho. Please go ahead.
John Baumkartner, Analyst, Mizuho: Good morning. Thanks for the question. First off, Ruben, just coming back to the comments on productivity, I’m wondering if you can discuss some of the newer initiatives. I think that this supply chain optimization program and the facility closure in Sweden. Can you elaborate a bit on this plan?
What else is involved in the program? And how should we think about the structural benefits?
Ruben Baldeau, CFO, Nomad Foods: Yes. So thank you for asking that question. So what we need now is a closure in the smaller factory in The Nordics. We’ve discussed some more on ones and in other discussion forum, our overall network. We actually see a program on a couple of access.
One is procurement, where I think we’ve already made great steps, but there’s more to come which we can also drive in the future years. And the second bit is on network, where we have to look at our total complexity of our network, the number of sites as well within a site, what we can do to optimize there. I’ve not been personally here in the role, as you’ve also heard in our prepared remarks, together with Stefan, together with our whole exec, with our Chief Supply Chain Officer, we’re embarking on a program to drive more cost competitiveness out of those programs and we’re keen to share more with you in the second half of the year.
John Baumkartner, Analyst, Mizuho: Okay. And then coming back to innovation, can you walk through the future Foods Lab you’ve established? What categories are you focusing on there? Do you plan on taking ownership interest in any of the partners? Is it just more of a commercialization relationship?
Just any more detail there would be helpful. Thank you.
Stephane Deschmaker, CEO, Nomad Foods: Yeah, it’s very interesting. It’s obviously early in the game for us, but we indeed are learning how to partner with actually I would put it that way. We were very much focused on ourselves for many years, and I think we have evolved and we’re learning now how to deal with new guys as a start ups. We have some more to come in food service, probably in the coming months. We have a first example.
I will spare you the detail this is because it feels very, very highly confidential. But definitely it’s the kind of things we’ve learned a lot with the startup and we’re going to start with them in some countries where food service is present for us. You know that food service is big for us in Southeastern Europe, in Switzerland,
John Tanwanteng, Analyst, CJS Securities: in
Stephane Deschmaker, CEO, Nomad Foods: The Nordics, and also in Spain, Portugal. So we’re going to start with that, but more to come in August. But again, I don’t want to come with a name right now because it’s still confidential, but definitely it’s going to come in the coming months. And more to come with orders. We’re also developing, by the way, pilot plans, which also is going to help us and our partners to move faster in terms of innovation.
I think the speed at which innovation is taking place is absolutely critical. And with these kind of steps, we also can move faster and then more with CMM will be closer to the market. But there will be other things. This portal is very interesting. Received a lot of attention from a lot of people and now we’re in the process of selecting the guys with whom we want to work.
But it’s very promising.
John Tanwanteng, Analyst, CJS Securities: Thank you.
Conference Operator: Our next question comes from John Tanwanteng with CJS Securities. Please go ahead.
John Tanwanteng, Analyst, CJS Securities: Hi, good morning. Thank you for taking my questions. I was wondering if you could talk about the portfolio and maybe this is a longer term question, just how you might be dealing with hotter weather on average structurally versus the true outliers like you saw in Q2. We’ve seen more heat waves in recent years. And if that’s something you need to prepare for, even the portfolio, I don’t know if it’s moving ice cream out of the Adriatic or doing something with your crops and supply chain to position for that.
Just help us understand the long term positioning and how you might be dealing with that, if at all. You.
Stephane Deschmaker, CEO, Nomad Foods: John, I think it’s not only how to move up to the challenge we expect to experience this year, it’s also the fact that year in year out, even with quote unquote normal weather, structurally frozen food is lower in the summer than in the spring or winter, obviously, or later in year. And then I think this combination of lower plus obviously the heat wave is something that we want to tackle more seriously. The difference compared to many years ago when I the teams at the time tried something, have our poultry is so much wider. We have chicken. We didn’t have chicken in the past.
And chicken does very well obviously with barbecues, marinated chicken, that kind of thing. That’s one thing. We also still have great meat by the way, that we also can experience much further with retailers. Let’s say something like natural fish. Natural fish is very well developed in countries like like Italy, for example.
It’s not developed at all or not enough in a country like The UK where it’s mostly coated fish. Well, can tell you, when it’s 30 degrees, you don’t necessarily want to eat a fish finger or a fish stick. Well, let’s say marinated fish or natural fish works very well. Potatoes in terms of to get together with barbecue is also something we’ve developed a lot. And I’m not even talking about the ice cream, which is something new for us.
We have obviously a very strong goal in the Adriatic with Croatia and Bosnia. And well, a bit accidentally somehow, we started to develop something in Austria which is doing well because we had a very strong, let’s say, people. In Vienna we had a lot of people coming from Croatia and they did well. So we’re starting to develop these kind of things. Does that mean that we’re going to do it with ice cream in others?
Not necessarily, but at least we have the assortment today that is available. And the first thing we’re doing now is we’re talking to all the countries to see what they see. And also, very importantly, we’re also starting the conversation with the trade. Because it has to be incremental, and it can be incremental, but it requires also agility how to move faster from one season to another. So a lot of things, a lot of opportunities, but definitely frozen food can do well with the summer, and more specifically with the wind heat waves.
John Tanwanteng, Analyst, CJS Securities: Great, that’s very helpful Stephane. And then second, just any update on the capital allocation priorities. With the stock indicating down, you’ve done repurchases, or maybe there’s a preference for debt repayment here. Any thoughts there?
Ruben Baldeau, CFO, Nomad Foods: Yes. So thank you for that. We have done quite a bit of share buybacks in H1, 100,000,000, first year before less than €20,000,000 We just announced a dividend. So I think from kind of capital allocation, we’ve done a lot with buybacks and with the dividend. We want to keep our flexibility.
In the past, we’ve shown to be a good M and A and acquired being able to acquire good companies. But at this moment with our current valuation also what’s out there in the market, it’s not that in the short term there’s an M and A pipeline, where we’re now committing to buyback, that also depends on our overall flexibility.
John Tanwanteng, Analyst, CJS Securities: Great, thank you.
Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Stephane Duschermacher for any closing remarks.
Stephane Deschmaker, CEO, Nomad Foods: Thank you, operator. So while I’m disappointed by our first half performance, I remain not less confident in the future that lies ahead of us. We have a great portfolio, we have a strategy that is working, and we have a talented team of people well equipped to deliver the plans we have in front of us. We have successfully stabilized our market share and have compelling plans to increase our competitiveness in the back half of the year. We are well positioned to delivering accelerating growth when the disruption subsides.
I look forward to demonstrating that with results when we update you again next quarter. Thank you for your time and interest in Nomad Foods.
Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
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